-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QaVMIgoa7P4RZXMpncvVI0lRs1hqKaAIcj1xPOmhMQRHfSsECha9qA6SSSGGLI8X 2uNSCKqjeNBuOAGfy84TrQ== 0000950170-96-001033.txt : 19961118 0000950170-96-001033.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950170-96-001033 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALL AMERICAN SEMICONDUCTOR INC CENTRAL INDEX KEY: 0000818074 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 592814714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16207 FILM NUMBER: 96666657 BUSINESS ADDRESS: STREET 1: 16115 N W 52ND AVENUE CITY: MIAMI STATE: FL ZIP: 33014 BUSINESS PHONE: 3056218282 MAIL ADDRESS: STREET 1: 16115 NW 52ND AVENUE CITY: MIAMI STATE: FL ZIP: 33014 10-Q 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 --OR-- _____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 1996 Commission File Number: 0-16207 ALL AMERICAN SEMICONDUCTOR, INC. (Exact name of registrant as specified in its charter) DELAWARE 59-2814714 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 16115 NORTHWEST 52ND AVENUE, MIAMI, FLORIDA 33014 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (305) 621-8282 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes ___ No As of November 11, 1996, 20,418,894 shares (including 160,703 shares held by a wholly-owned subsidiary of the Registrant) of the common stock of All American Semiconductor, Inc. were outstanding. ================================================================================
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES FORM 10-Q - INDEX PART ITEM PAGE NO. NO. DESCRIPTION NO. - ------------------------------------------------------------------------------------------------------------------- I FINANCIAL INFORMATION: 1. Financial Statements Consolidated Condensed Balance Sheets at September 30, 1996 (Unaudited) and December 31, 1995.......................................................... 1 Consolidated Condensed Statements of Operations for the Quarters and Nine Months Ended September 30, 1996 and 1995 (Unaudited).............................. 2 Consolidated Condensed Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1995 (Unaudited).................................. 3 Notes to Consolidated Condensed Financial Statements (Unaudited)............................ 4 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................................................... 8 II OTHER INFORMATION: 4. Submission of Matters to a Vote of Security Holders......................................... 12 6. Exhibits and Reports on Form 8-K............................................................ 12 SIGNATURES.................................................................................. 13
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ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS SEPTEMBER 30 DECEMBER 31 ASSETS 1996 1995 - ------------------------------------------------------------------------------------------------------------------ (UNAUDITED) Current assets: Cash............................................................... $ 199,000 $ 276,000 Accounts receivable, less allowances for doubtful accounts of $1,442,000 and $921,000............................ 34,130,000 35,101,000 Inventories........................................................ 67,480,000 67,463,000 Other current assets............................................... 6,211,000 1,959,000 ----------------- ----------------- Total current assets........................................... 108,020,000 104,799,000 Property, plant and equipment - net.................................... 5,492,000 3,882,000 Deposits and other assets.............................................. 5,229,000 2,316,000 Excess of cost over fair value of net assets acquired - net............ 1,096,000 3,477,000 ----------------- ----------------- $ 119,837,000 $ 114,474,000 ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------------ Current liabilities: Current portion of long-term debt.................................. $ 473,000 $ 844,000 Accounts payable and accrued expenses.............................. 33,774,000 43,451,000 Income taxes payable............................................... - 199,000 Other current liabilities.......................................... 620,000 953,000 ----------------- ----------------- Total current liabilities...................................... 34,867,000 45,447,000 Long-term debt: Notes payable...................................................... 53,280,000 29,900,000 Subordinated debt.................................................. 6,441,000 6,515,000 Other long-term debt............................................... 535,000 345,000 ----------------- ----------------- 95,123,000 82,207,000 ----------------- ----------------- Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued........................................ - - Common stock, $.01 par value, 40,000,000 shares authorized, 20,418,894 and 19,863,895 shares issued, 19,928,895 and 19,863,895 shares outstanding.................................. 199,000 199,000 Capital in excess of par value..................................... 25,670,000 25,511,000 Retained earnings (deficit)........................................ (704,000) 7,008,000 Treasury stock, at cost, 180,295 shares............................ (451,000) (451,000) ----------------- ----------------- 24,714,000 32,267,000 ----------------- ----------------- $ 119,837,000 $ 114,474,000 ================= =================
See notes to consolidated condensed financial statements 1
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) QUARTERS NINE MONTHS PERIODS ENDED SEPTEMBER 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- NET SALES................................... $ 56,514,000 $ 46,512,000 $ 181,219,000 $ 130,287,000 Cost of sales............................... (45,473,000) (36,261,000) (141,435,000) (101,364,000) ---------------- ----------------- ------------------ ---------------- Gross profit................................ 11,041,000 10,251,000 39,784,000 28,923,000 Selling, general and administrative expenses.................... (14,040,000) (8,048,000) (40,130,000) (22,966,000) Impairment of goodwill...................... (2,428,000) - (2,428,000) - Restructuring and other nonrecurring expenses................................... (1,092,000) - (2,022,000) - ---------------- ----------------- ------------------ ---------------- INCOME (LOSS) FROM CONTINUING OPERATIONS................................. (6,519,000) 2,203,000 (4,796,000) 5,957,000 Interest expense............................ (1,475,000) (627,000) (3,923,000) (2,013,000) ---------------- ----------------- ------------------ ---------------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES .............................. (7,994,000) 1,576,000 (8,719,000) 3,944,000 Income tax (provision) benefit.............. 2,394,000 (604,000) 2,706,000 (1,622,000) ---------------- ----------------- ----------------- ---------------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEMS...................................... (5,600,000) 972,000 (6,013,000) 2,322,000 Discontinued operations: Loss from operations (net of $120,000; $100,000; $125,000 and $103,000 income tax benefit)........................ (159,000) (131,000) (166,000) (135,000) Loss on disposal (net of $1,200,000 income tax benefit)........................ (1,591,000) - (1,591,000) - ---------------- ----------------- ------------------ ---------------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS........................ (7,350,000) 841,000 (7,770,000) 2,187,000 Extraordinary items: Gain from settlement of litigation (net of $205,000 income tax provision)............. - - 272,000 - Loss on early retirement of debt (net of $161,000 income tax benefit)............... - - (214,000) - ---------------- ----------------- ------------------ ---------------- NET INCOME (LOSS)........................... $ (7,350,000) $ 841,000 $ (7,712,000) $ 2,187,000 ================ ================= ================== ================ Primary earnings per share: Income (loss) from continuing operations ... $(.28) $ .06 $(.29) $ .16 Discontinued operations..................... (.09) (.01) (.09) (.01) Extraordinary items......................... - - - - ----- ----- ----- ----- Net income (loss)........................... $(.37) $ .05 $(.38) $ .15 ===== ===== ===== ===== Fully diluted earnings per share: Income (loss) from continuing operations ... $(.28) $ .05 $(.29) $ .15 Discontinued operations..................... (.09) (.01) (.09) (.01) Extraordinary items......................... - - - - ----- ----- ----- ----- Net income (loss) .......................... $(.37) $ .04 $(.38) $ .14 ===== ===== ===== =====
See notes to consolidated condensed financial statements 2
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Cash Flows Used By Operating Activities........................... $ (19,622,000) $ (9,460,000) ---------------- ----------------- Cash Flows From Investing Activities: Acquisition of property and equipment............................. (2,132,000) (1,074,000) Increase in other assets.......................................... (1,163,000) (223,000) ---------------- ----------------- Cash flows used for investing activities..................... (3,295,000) (1,297,000) ---------------- ----------------- Cash Flows From Financing Activities: Net borrowings under line of credit agreement..................... 23,556,000 2,411,000 Increase in notes payable......................................... 15,000,000 133,000 Repayments of notes payable....................................... (15,725,000) (310,000) Net proceeds from issuance of equity securities................... 9,000 8,538,000 ---------------- ----------------- Cash flows provided by financing activities.................. 22,840,000 10,772,000 ---------------- ----------------- Increase (decrease) in cash....................................... (77,000) 15,000 Cash, beginning of period......................................... 276,000 200,000 ---------------- ----------------- Cash, end of period............................................... $ 199,000 $ 215,000 ================ ================= Supplemental Cash Flow Information: Interest paid..................................................... $ 2,501,000 $ 1,733,000 ================ ================= Income taxes paid................................................. $ 1,104,000 $ 523,000 ================ =================
Supplemental Schedule of Noncash Investing and Financing Activities: Effective January 1, 1996, the Company purchased all of the capital stock of Programming Plus Incorporated ("PPI"). The consideration paid by the Company for such capital stock consisted of 549,999 shares of common stock of the Company valued at $1,375,000 (or $2.50 per share); however, only 60,000 shares of common stock (valued at $150,000) were released to the PPI selling shareholders at closing, with the balance retained in escrow subject to certain conditions subsequent. See notes to consolidated condensed financial statements 3 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) ================================================================================ 1. BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements include all adjustments (consisting of normal recurring accruals or adjustments only) necessary to present fairly the financial position at September 30, 1996, and the results of operations and the cash flows for all periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be obtained for the entire year. For a summary of significant accounting policies (which have not changed from December 31, 1995) and additional financial information, see the Company's Annual Report on Form 10-K for the year ended December 31, 1995, including the consolidated financial statements and notes thereto which should be read in conjunction with these financial statements. Prior periods' financial statements have been reclassified to conform with the current period's presentation. 2. LONG-TERM DEBT On May 3, 1996 the Company entered into a new $100 million line of credit facility with a group of banks (the "New Credit Facility") which expires May 3, 2001. At the time of entering into such facility, borrowings under the New Credit Facility bore interest, at the Company's option, at either prime plus one-quarter of one percent (.25%) or LIBOR plus two and one-quarter percent (2.25%). Borrowings under the New Credit Facility are secured by all of the Company's assets including accounts receivable, inventories and equipment. The amounts that the Company may borrow under the New Credit Facility are based upon specified percentages of the Company's eligible accounts receivable and inventories (as defined). Under the New Credit Facility, the Company is required to comply with certain affirmative and negative covenants as well as to comply with certain financial ratios. These covenants, among other things, place limitations and restrictions on the Company's borrowings, investments and transactions with affiliates and prohibit dividends and stock redemptions. Furthermore, the New Credit Facility requires the Company to maintain certain minimum levels of tangible net worth throughout the term of the agreement and a minimum debt service coverage ratio which is tested on a quarterly basis. In August 1996, and November 1996, subsequent to the balance sheet date, the Company's New Credit Facility was amended whereby certain financial covenants were modified. In addition, the November 1996 amendment increased the Company's borrowing rate by one-quarter of one percent (.25%). In connection with the New Credit Facility, on May 6, 1996, the Company repaid all outstanding borrowings under the Company's previous $45 million line of credit facility and repaid the Company's $15 million senior subordinated promissory note (the "Subordinated Note"). The Subordinated Note had been issued on March 18, 1996 and was scheduled to mature on July 31, 1997. As a result of the early extinguishment of the Subordinated Note, the Company accrued, in the first quarter of 1996, an extraordinary after-tax expense of $214,000, net of a related income tax benefit of $161,000. The extraordinary expense as well as the related decrease in subordinated debt and increase in notes payable are reflected in the consolidated financial statements for the nine months ended September 30, 1996. At September 30, 1996, outstanding borrowings under the Company's credit facility aggregated $53,266,000. 3. ACQUISITIONS Effective January 1, 1996, the Company purchased all of the capital stock of Programming Plus Incorporated ("PPI"), which provides programming and tape and reel services with respect to electronic components. The purchase price for PPI consisted of $1,375,000 of common stock of the Company, valued at $2.50 per share. Only 60,000 shares of the Company's common stock, valued at $150,000, were released to the PPI selling 4 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) ================================================================================ shareholders at closing. The $1,225,000 balance of the consideration ("Additional Consideration"), represented by 489,999 shares of common stock of the Company, was retained in escrow by the Company, as escrow agent. The Additional Consideration will be released to the PPI selling shareholders annually if and based upon certain levels of pre-tax net income being attained by the acquired company for the years ended December 31, 1996 through December 31, 2000. If, as of December 31, 2000, all of the Additional Consideration has not been released, the balance held in escrow will be canceled. The PPI selling shareholders must vote all of the Company's common stock issued to them (whether or not held in escrow) as directed by the Company until the escrow is terminated. In addition, the PPI selling shareholders entered into a four-year consulting obligation with PPI in consideration of certain automobile benefits, and a covenant not to compete with PPI. The total amount paid by PPI for such automobile benefits and covenant was $150,000. The acquisition was accounted for by the purchase method of accounting which resulted in the recognition of approximately $70,000 of excess cost over fair value of net assets acquired. The excess cost over fair value of net assets acquired was subsequently deemed impaired (see Note 4 below) and, as of September 30, 1996, was written-off. The assets, liabilities and operating results of PPI are included in the consolidated financial statements of the Company from the date of acquisition. On December 29, 1995, the Company purchased through two separate mergers with and into the Company's wholly-owned subsidiaries all of the capital stock of Added Value Electronics Distribution, Inc. and A.V.E.D.-Rocky Mountain, Inc. (collectively, the "Added Value Companies"). The assets, liabilities and operating results of the Added Value Companies are included in the consolidated financial statements from the date of the acquisitions. See Note 4 below regarding impairment of goodwill in connection with the acquisitions of the Added Value Companies. The following unaudited pro forma consolidated income statement data presents the consolidated results of operations of the Company for the quarter and nine months ended September 30, 1995 as if the acquisitions of the Added Value Companies and PPI had occurred at the beginning of the periods presented:
PERIODS ENDED SEPTEMBER 30, 1995 QUARTER NINE MONTHS - ------------------------------------------------------------------------------------------------------------------- Net sales..................................................... $57,758,000 $161,327,000 Net income.................................................... 1,147,000 2,948,000 Primary earnings per share.................................... .06 .17 Fully diluted earnings per share.............................. .05 .16
The above pro forma information does not purport to be indicative of what would have occurred had the acquisitions been made as of such date or of the results which may occur in the future. 4. IMPAIRMENT OF GOODWILL In connection with the Company's acquisitions of the Added Value Companies and PPI, at September 30, 1996, the Company recognized an impairment of goodwill. This noncash charge of approximately $2,400,000, which is primarily related to the Added Value Companies, has no associated tax benefit. A variety of factors contributed to the impairment of the goodwill relating to the Added Value Companies. These factors include a significant reduction in the revenues and operating results generated by the Added Value Companies` customer base acquired by the Company, a restructuring of the Added Value Companies' kitting and turnkey operations due to the Company determining that it was not economically feasible to continue and expand such division as originally planned, as well as the termination of certain principals and senior management of the Added Value Companies who became employees of the Company at the time of the closing of the acquisitions. See Note 5 below. These factors have greatly reduced the estimated future cash flows from the Added Value Companies. In determining the amount of the impairment charge, the Company developed its best estimate of projected operating cash flows over the remaining period of expected benefit. Projected future cash flows were discounted 5 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) ================================================================================ and compared to the carrying value of the related goodwill. As a result, a write-down of approximately $2,400,000 was recorded as of September 30, 1996. 5. RESTRUCTURING AND OTHER NONRECURRING EXPENSES During the third quarter of 1996, the Company recorded a pretax charge of $1,092,000 associated primarily with the restructuring of its kitting and turnkey operations. The kitting department was created toward the end of 1994 and, at the time of the December 1995 acquisitions of the Added Value Companies, the Company intended to utilize the extensive kitting capabilities acquired and expand such service nationwide. In addition, the acquisitions provided the Company with capabilities in turnkey manufacturing services. After evaluating, with the assistance of consultants, the Company's cost structure and service capabilities, management determined that it was not economically feasible to continue its current level of investment in such services, especially in light of the adverse market conditions within the industry. As a result, the Company adopted a plan to restructure its kitting and turnkey operations. In connection with this plan, the Company reduced the related workforce and accrued for employee severance and related benefits and wrote down various related assets. The portion of the restructuring charge which represented severance and related benefits aggregated approximately $625,000. The workforce reductions primarily affected approximately 90 employees of the Company's sales, management and operations departments. As of September 30, 1996, approximately $56,000 of termination benefits were applied to the restructuring accrual. The Company expects to pay approximately 30% of the accrued liability by the end of 1996, with the balance expected to be paid during 1997. After the completion of the restructuring, the Company should have reduced overhead and enhanced operational efficiency. In addition, in the third quarter of 1996, the Company wrote-off $2,000,000 of inventory associated primarily with the restructuring of the kitting and turnkey operations which is reflected in cost of sales in the accompanying Consolidated Condensed Statements of Operations. In June 1996, the Company terminated certain employment agreements which were entered into in connection with the Added Value Companies' acquisitions. As a result, the Company accrued $485,000 of nonrecurring expenses in the second quarter of 1996, representing the aggregate of the payments to be made under such agreements through their expiration dates of December 31, 1997. In May 1996, the Company decided to close its cable assembly division in Lisle, Illinois and to relocate certain of such operations to its Miami distribution facility. Accordingly, the Company accrued $445,000 of nonrecurring expenses in the first quarter of 1996 relating to such decision, including the write-down of certain cable assembly-specific inventory, operating costs through the date of relocation and severance pay. 6. DISCONTINUED OPERATIONS In June 1995, the Company established a computer products division ("CPD") which operates under the name Access Micro Products. This division sells microprocessors, motherboards, computer upgrade kits, keyboards and disk drives primarily to value added resellers, retailers and distributors of computer products. During the first quarter of 1996 this division was profitable and growing. As a result of this growth and at the request of the division's primary supplier, the Company expanded its staffing and infrastructure to support the expected continued growth. During the second quarter of 1996, the Company was notified by the division's primary supplier that it had discontinued the production of certain products that were the mainstay of the Company's computer products division. Although the Company obtained additional product offerings, without these mainstay products revenues of Access Micro Products were severely impacted and, as a result, management decided to discontinue CPD. The Company finalized its plan of disposal during the third quarter of 1996. Accordingly, this division is accounted for as discontinued operations and the results of operations for all periods shown are segregated in the accompanying Consolidated Condensed Statements of Operations. Net sales, cost 6 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) ================================================================================ of sales, operating expenses and income taxes for the prior periods have been reclassified for amounts associated with the discontinued division. The loss on disposal of $2,791,000, on an pretax basis, includes the estimated costs and expenses associated with the disposal of $2,326,000 as well as a provision of $465,000 for operating losses during the phase-out period, which is expected to be approximately six months. Sales from this division were $835,000, $5,894,000, $436,000 and $436,000 for the three and nine months ended September 30, 1996 and for the same periods of 1995, respectively. The net assets of discontinued operations, after reflecting certain noncash write-offs of inventory and receivables, included in the accompanying Consolidated Condensed Balance Sheet at September 30, 1996 are summarized as follows: Current assets.................................... $ 767,000 Property, plant and equipment - net............... 42,000 Current liabilities............................... (4,000) --------- Net assets........................................ $ 805,000 ========= 7. OPTIONS During the nine months ended September 30, 1996, the Company issued an aggregate of 226,500 stock options to 27 individuals pursuant to the Employees', Officers', Directors' Stock Option Plan, as previously amended and restated. These options have an exercise price of $2.31 per share and are exercisable over a five-year period. 8. EARNINGS PER SHARE The weighted average shares outstanding are as follows:
QUARTERS NINE MONTHS PERIODS ENDED SEPTEMBER 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------- Primary 20,058,994 18,659,388 20,303,120 15,050,361 Fully Diluted 20,058,994 18,989,945 20,303,120 15,822,097
9. SETTLEMENT OF LITIGATION In June 1996, the Company settled a civil action in connection with the Company's prior acquisition of certain computer equipment. In connection with the settlement agreement, the Company recognized an extraordinary after-tax gain of $272,000, net of related expenses, which is reflected in the Consolidated Condensed Financial Statements for the nine months ended September 30, 1996. 7 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ================================================================================ All American Semiconductor, Inc. and its subsidiaries (the "Company") is a national distributor of electronic components manufactured by others. The Company distributes a full range of semiconductors (active components), including transistors, diodes, memory devices and other integrated circuits, as well as passive components, such as capacitors, resistors, inductors and electromechanical products including cable, connectors, filters and sockets. These products are sold primarily to original equipment manufacturers ("OEMs") in a diverse and growing range of industries, including manufacturers of computers and computer-related products, satellite and communications products, consumer goods, robotics and industrial equipment, defense and aerospace equipment and medical instrumentation. In June 1995, the Company began distributing a very limited offering of computer products, presently consisting of microprocessors, motherboards, computer upgrade kits, keyboards and disk drives. During the third quarter of 1996, the Company decided to discontinue its computer products division. See Note 6 to Notes to Consolidated Condensed Financial Statements. As a result of certain acquisitions completed in December 1995, the Company is also involved in the design, manufacture and sale of flat panel display products, as well as standard and custom memory module products. RESULTS OF OPERATIONS Net sales for the quarter and nine months ended September 30, 1996 were $56.5 million and $181.2 million, representing a 21.5% and 39.1% increase over net sales of $46.5 million and $130.3 million for the same periods of 1995. The increases were primarily attributable to revenues generated by acquired companies, higher sales in certain territories, and revenues generated from new sales offices. While sales for the 1996 periods were ahead of last year, sales for the third quarter of 1996 represented the second consecutive quarterly decline and were substantially below the Company's expectations due to adverse market conditions and continued price erosion on a broad range of products. Gross profit, without giving effect to a $2.0 million inventory write-off associated primarily with the Company's restructuring plan of its kitting and turnkey operations (see Note 5 to Notes to Consolidated Condensed Financial Statements), was $13.0 million in the third quarter of 1996 representing a 27.2% increase over gross profit of $10.3 million for the same period of 1995. For the first nine months of 1996, gross profit was $41.8 million, excluding the inventory write-off, compared to $28.9 million for the same period of 1995, representing a 44.5% increase. The increases were due to the growth in sales as well as the increase in gross profit margins as a percentage of net sales. Gross profit margins as a percentage of net sales, without giving effect to the inventory write-off, were 23.1% for the third quarter and first nine months of 1996 compared to 22.0% and 22.2% for the third quarter and first nine months of 1995. The increase in gross profit margins primarily reflects a fewer number of low margin, large volume transactions during the 1996 periods than in the previous year. After giving effect to the inventory write-off, gross profit dollars were $11.0 million and $39.8 million and gross profit margins were 19.5% and 22.0% for the third quarter and first nine months of 1996. Selling, general and administrative expenses ("SG&A") was $14.0 million for the third quarter of 1996 compared to $8.0 million for the third quarter of 1995. SG&A for the first nine months of 1996 was $40.1 million compared to $23.0 million for the same period of 1995. The increases were primarily the result of the December 1995 acquisitions as well as the Company's rapid growth and aggressive expansion. In connection with such acquisitions, all categories of SG&A increased. In addition, the Company incurred consulting fees associated with the systems conversions of the acquired companies and with the further development of the Company's value added strategies. SG&A also increased as a result of two new divisions, Aved Industries and Apex Solutions, which were created as part of the acquisitions. Aved Industries concentrates on the design, manufacture, sales and marketing of flat panel display products and technical support for these products, as well as the design, manufacture, sales and marketing of standard and custom memory module products. Apex Solutions was created to expand the Company's ability to support kitting and turnkey services on a national basis. In connection with these two new divisions, the Company increased staffing and also incurred additional operating expenses. In addition to the impact of these acquisitions, variable SG&A expenses, including sales 8 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ================================================================================ commissions and telephone expenses, increased as a result of the increases in sales for the 1996 periods over the same periods of 1995. In order to drive and support future growth as well as to support the operations of the above referenced acquisitions, the Company expanded its sales personnel; during the latter part of 1995 and early 1996 opened five new sales offices, created and staffed northeast and southwest credit departments and increased staffing in almost all corporate departments. Furthermore, in an effort to diversify its business and expand its service capabilities and product offerings, the Company, during 1995, created a computer products division ("CPD") which distributes microprocessors, motherboards and other computer products; and created a cable assembly division in Lisle, Illinois, which in May 1996 was relocated to the Company's Miami distribution facility. During 1996, the Company relocated its west coast programming and distribution center into a significantly larger facility and added additional staff for these operations. In early 1996, the Company also acquired Programming Plus Incorporated (see Note 3 to Notes to Consolidated Condensed Financial Statements) and further increased staffing to support CPD. As a result of all of the foregoing, SG&A for the 1996 periods reflects increased salaries, payroll taxes and employee benefit costs as well as additional operating expenses such as rent and office supplies. SG&A as a percentage of net sales was 24.8% and 22.1% for the third quarter and nine months ended September 30, 1996, compared to 17.3% and 17.6% for the same periods of 1995. The increases in SG&A as a percentage of net sales reflect the increases in expenses associated with the acquisitions and expansion described above, the additional operating costs in connection with the restructuring as well as with the continued building of the Company's infrastructure to support significantly higher sales levels than were attained. SG&A in absolute dollars and as a percentage of net sales may further increase in the near term. Due to the recent adverse market conditions and the significantly lower than anticipated sales level, the Company has developed and begun implementing expense control strategies and has restructured and discontinued unprofitable divisions. During the third quarter of 1996, the Company determined that it was not economically feasible to continue its current level of investment in Apex Solutions, especially in light of the adverse market conditions within the industry. As a result, the Company adopted a plan to restructure its kitting and turnkey operations. In connection with this plan, the Company reduced the related workforce and accrued for employee severance and related benefits and wrote down various related assets. This restructuring resulted in a pretax charge of $1.1 million which is reflected as restructuring and other nonrecurring expenses in the accompanying Consolidated Condensed Statements of Operations. See Note 5 to Notes to Consolidated Condensed Financial Statements. In addition, SG&A for the 1996 periods includes approximately $800,000 of costs primarily associated with operating Apex Solutions during the restructuring phase. In addition, based on a decision made in the third quarter of 1996, the Company is in the process of closing CPD and has reflected this division in the accompanying Consolidated Condensed Financial Statements as discontinued operations. See Note 6 to Notes to Consolidated Condensed Financial Statements. The positive impact of these strategies may not be realized until future periods. The Company believes that as the expense adjustments take effect, including the benefits of the restructuring of the kitting and turnkey operations and the discontinuance of CPD, and as the adverse market conditions subside, the Company should improve its performance in the future. In connection with the Company's acquisitions of the Added Value Companies and PPI, at September 30, 1996, the Company recognized an impairment of goodwill. This noncash charge of approximately $2,400,000, which is primarily related to the Added Value Companies, has no associated tax benefit. A variety of factors contributed to the impairment of the goodwill relating to the Added Value Companies. These factors include a significant reduction in the revenues and operating results generated by the Added Value Companies' customer base acquired by the Company, a restructuring of the Added Value Companies' kitting and turnkey operations due to the Company determining that it was not economically feasible to continue and expand such division as originally planned, as well as the termination of certain principals and senior management of the Added Value Companies who became employees of the Company at the time of the closing of the acquisitions. These factors 9 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ================================================================================ have greatly reduced the estimated future cash flows from the Added Value Companies. See Notes 4 and 5 to Notes to Consolidated Condensed Financial Statements. For the third quarter of 1996, after deducting the above mentioned inventory write-off, impairment of goodwill and restructuring and other nonrecurring expenses, the Company had a loss from continuing operations of $6.5 million. This compared to $2.2 million of income from continuing operations for the third quarter of 1995. For the nine months ended September 30, 1996, the loss from continuing operations was $4.8 million, after deducting the previously described inventory write-off, impairment of goodwill and restructuring expenses associated with the kitting and turnkey operations, as well as other nonrecurring expenses relating to the termination of certain employment agreements entered into in connection with the acquisitions of the Added Value Companies and the relocation of the Company's Illinois cable assembly division. See Notes 4 and 5 to Notes to Consolidated Condensed Financial Statements. Income from continuing operations was $6.0 million for the nine months ended September 30, 1995. The decreases in income from continuing operations, without giving effect to these charges, was attributable to the increases in SG&A which more than offset the increase in sales and gross profit margins. Interest expense increased to $1.5 million and $3.9 million for the third quarter and first nine months of 1996, as compared to $627,000 and $2.0 million for the same periods of 1995. The increases resulted from additional borrowings to fund the two acquisitions completed in December 1995 as well as additional borrowings required to support the Company's growth. Interest expense for the 1996 periods also reflects amortization of deferred financing fees as well as the impact from the increase in the Company's borrowing rate under the New Credit Facility. See Note 2 to Notes to Consolidated Condensed Financial Statements. After giving effect to the previously described after-tax write-off of inventory, impairment of goodwill, restructuring and other nonrecurring expenses, as well as a loss from discontinued operations of CPD, the Company had a net loss of $7.4 million, $.37 per share, and $7.7 million, $.38 per share, for the quarter and nine months ended September 30, 1996, compared to net income of $841,000, $.05 per share ($.04 fully diluted), and $2.2 million, $.15 per share ($.14 fully diluted), for the 1995 periods. Management decided to discontinue CPD due to revenues generated by this division being significantly below the Company's expectations principally as a result of the division's primary supplier discontinuing the production of certain products that were the mainstay of this division. The loss from discontinued operations reflects the estimated costs and expenses associated with the disposal, including the write-off of certain assets, as well as a provision for operating losses during the phase-out period which is expected to be approximately six months. Included in the first nine months of 1996 is an extraordinary after-tax gain of $272,000 recognized in connection with the Company's settlement of a civil litigation. The nine-month period of 1996 also includes an extraordinary after-tax expense of $214,000 resulting from the early extinguishment of the Company's $15 million senior subordinated promissory note. LIQUIDITY AND CAPITAL RESOURCES Working capital at September 30, 1996 increased to $73.2 million, from working capital of $59.4 million at December 31, 1995. The current ratio was 3.10:1 at September 30, 1996, as compared to 2.31:1 at December 31, 1995. The increase in the current ratio was primarily due to an increase in other current assets relating to a receivable generated in 1996 in connection with income tax benefits associated with the restructuring and other nonrecurring expenses, and discontinued operations, as well as a reduction in accounts payable and accrued expenses. Accounts receivable levels at September 30, 1996 were $34.1 million, down slightly from accounts receivable of $35.1 million at December 31, 1995. The decrease in accounts receivable at September 30, 1996 was due to a noncash write-off of $1.1 million of accounts receivable relating to the closing of CPD as well as a decrease in the average number of days that accounts receivables were outstanding from December 31, 1995. Inventory levels were $67.5 million at September 30, 1996 and December 31, 1995. The inventory balance at September 30, 1996 reflects noncash write-offs of $2.0 million relating to the restructuring of the kitting and turnkey operations and $650,000 relating to the closing of CPD. Accounts 10 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ================================================================================ payable and accrued expenses decreased to $33.8 million at September 30, 1996 from $43.5 million at December 31, 1995. This decrease was primarily due to the payment of liabilities incurred in connection with the two acquisitions completed in December 1995, which was partially offset by the increase in accrued expenses associated with the restructuring of the kitting and turnkey operations and the closing of the computer products division. The Company expects to pay approximately 30% of this accrued liability by the end of 1996, with the balance expected to be paid during 1997. See Notes 5 and 6 to Notes to Consolidated Condensed Financial Statements. On May 3, 1996 the Company entered into a new $100 million line of credit facility with a group of banks (the "New Credit Facility") which expires May 3, 2001. At the time of entering into such facility, borrowings under the New Credit Facility bore interest, at the Company's option, at either prime plus one-quarter of one percent (.25%) or LIBOR plus two and one-quarter percent (2.25%). Borrowings under the New Credit Facility are secured by all of the Company's assets including accounts receivable, inventories and equipment. The amounts that the Company may borrow under the New Credit Facility are based upon specified percentages of the Company's eligible accounts receivable and inventories (as defined). Under the New Credit Facility, the Company is required to comply with certain affirmative and negative covenants as well as to comply with certain financial ratios. These covenants, among other things, place limitations and restrictions on the Company's borrowings, investments and transactions with affiliates and prohibit dividends and stock redemptions. Furthermore, the New Credit Facility requires the Company to maintain certain minimum levels of tangible net worth throughout the term of the agreement and a minimum debt service coverage ratio which is tested on a quarterly basis. In August 1996, and November 1996, subsequent to the balance sheet date, the Company's New Credit Facility was amended whereby certain financial covenants were modified. In addition, the November 1996 amendment increased the Company's borrowing rate by one-quarter of one percent (.25%). See Note 2 to Notes to Consolidated Condensed Financial Statements. At September 30, 1996, outstanding borrowings under the New Credit Facility aggregated $53.3 million. Effective January 1, 1996, the Company purchased all of the capital stock of Programming Plus Incorporated ("PPI"). The purchase price for PPI consisted of $1,375,000 of common stock of the Company, valued at $2.50 per share. Only 60,000 shares of the Company's common stock, valued at $150,000, were released to the PPI selling shareholders at closing. The $1,225,000 balance of the consideration ("Additional Consideration"), represented by 489,999 shares of common stock of the Company, was retained in escrow by the Company, as escrow agent. The Additional Consideration will be released to the PPI selling shareholders annually if and based upon certain levels of pre-tax net income being attained by the acquired company for the years ended December 31, 1996 through December 31, 2000. If, as of December 31, 2000, all of the Additional Consideration has not been released, the balance held in escrow will be canceled. The PPI selling shareholders must vote all of the Company's common stock issued to them (whether or not held in escrow) as directed by the Company until the escrow is terminated. In addition, the PPI selling shareholders entered into a four-year consulting obligation with PPI in consideration of certain automobile benefits, and a covenant not to compete with PPI. The total amount paid by PPI for such automobile benefits and covenant was $150,000. The acquisition was accounted for by the purchase method of accounting which resulted in the recognition of approximately $70,000 of excess cost over fair value of net assets acquired. The excess cost over fair value of net assets acquired was subsequently deemed impaired and, as of September 30, 1996, was written-off. The assets, liabilities and operating results of PPI are included in the consolidated financial statements of the Company from the date of acquisition. See Note 3 to Notes to Consolidated Condensed Financial Statements. The Company expects that its cash flows from operations and additional borrowings available under the New Credit Facility will be sufficient to meet its current financial requirements over the next twelve months. 11 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION - ------------------------------------------------------------------------------ ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) On August 28, 1996, the Registrant held its 1995 annual meeting of shareholders (the "Annual Meeting"). (b) One matter voted on at the Annual Meeting was the election of two directors of the Registrant. The two nominees, who were existing directors of the Registrant and nominees of the Registrant's Board of Directors, were re-elected at the Annual Meeting as directors of the Registrant, receiving the number and percentage of votes for election and abstentions as set forth next to their respective names below:
NOMINEE FOR DIRECTOR FOR ABSTAIN -------------------- ---------- ------- Bruce M. Goldberg 17,042,249 98.8% 208,635 1.2% Howard L. Flanders 17,038,749 98.8% 212,135 1.2%
The other directors whose term of office as directors continued after the Annual Meeting are Paul Goldberg, Rick Gordon, S. Cye Mandel and Sheldon Lieberbaum. (c) The following additional matter was separately voted upon at the Annual Meeting and received the votes of the holders of the number of shares of Common Stock voted in person or by proxy at the Annual Meeting and the percentage of total votes cast as indicated below: Ratification of selection of independent accountants for 1996 fiscal year For 17,095,416 99.1% Against 108,986 0.6% Abstain 46,482 0.3% (d) Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 10.1 Amendment No. 2 to Loan and Security Agreement dated November 14, 1996 11.1 Statement Re: Computation of Per Share Earnings 27.1 Financial Data Schedule (b) REPORTS ON FORM 8-K The Company did not file any reports on Form 8-K during the quarter ended September 30, 1996. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALL AMERICAN SEMICONDUCTOR, INC. ----------------------------------------- (Registrant) Date: November 14, 1996 /s/ PAUL GOLDBERG ----------------------------------------- Paul Goldberg, Chairman of the Board and Chief Executive Officer (Duly Authorized Officer) Date: November 14, 1996 /s/ HOWARD L. FLANDERS ----------------------------------------- Howard L. Flanders, Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 13 EXHIBIT INDEX PAGE DOCUMENTS NUMBER --------- ------ 10.1 Amendment No. 2 to Loan and Security Agreement dated November 14, 1996. 11.1 Statement Re: Computation of Per Share Earnings 27.1 Financial Data Schedule 14 EX-10.1 2 AMEND. NO. 2 TO LOAN AND SECURITY AGREEMENT AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT November 14, 1996 All American Semiconductor, Inc. 16115 Northwest 52nd Avenue Miami, Florida 33014 Attention: Chief Financial Officer Ladies and Gentlemen: Reference is made to the Loan and Security Agreement dated as of May 3, 1996 among Harris Trust and Savings Bank, as a Lender and as Administrative Agent for the Lenders, American National Bank and Trust Company of Chicago, as a Lender and as Collateral Agent for the Lenders and the other Lenders party thereto and All American Semiconductor, Inc. (the "Loan Agreement"). Unless defined herein, capitalized terms used herein shall have the meanings provided for such terms in the Loan Agreement. Borrower has requested that Requisite Lenders agree to amend the Loan Agreement in order to modify certain financial covenants contained in the Loan Agreement. Requisite Lenders have agreed to the foregoing on the terms and pursuant to the conditions provided herein. Therefore, the parties hereto hereby agree as follows: 1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby amended, as follows: (a) SECTION 1.1. Section 1.1 of the Loan Agreement is amended, as follows: (i) The definition of the term "Applicable Domestic Margin" contained in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "Applicable Domestic Margin" shall mean an amount equal to one-half of one percent (.50%), subject to a prospective decrease of one-quarter of one percent (.25%) upon the occurrence of the Special Rate Decrease Event and each Rate Decrease Event, and subject to a prospective increase of one-quarter of one percent (.25%) upon the occurrence of each Rate Increase Event." (ii) The definition of the term "Applicable LIBOR Margin" contained in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "Applicable LIBOR Margin" shall mean an amount equal to two and one-half percent (2.50%), subject to a prospective decrease of one-quarter of one percent (.25%) upon the occurrence of the Special Rate Decrease Event and each Rate Decrease Event, and subject to a prospective increase of one-quarter of one percent (.25%) upon the occurrence of each Rate Increase Event; PROVIDED, that any increase or decrease of the Applicable LIBOR Margin will only be applicable with respect to LIBOR Portions selected or continued after the effective date of the applicable Rate Increase Event, Special Rate Decrease Event or Rate Decrease Event." (iii) The definition of the term "Tangible Net Worth" contained in Section 1.1 of the Loan Agreement is hereby amended by inserting the following immediately after clause (e) thereof and immediately prior to the phrase ", all determined on a consolidated basis in accordance with GAAP": ", plus the amount of any loss recognized by the Designated Companies with respect to the 1996 fiscal year relating to the buyout of an executive management contract entered into on May 24, 1995 which included a Retirement Election" (b) Section 1.1 of the Loan Agreement is further amended by inserting the following additional definition therein, in appropriate alphabetical order: "Special Rate Decrease Event" shall mean the satisfaction, as of the last day of any calendar month, commencing January 31, 1997, that the Applicable Domestic Margin is equal to one-half of one percent (.50%) and the Applicable LIBOR Margin is equal to two and one-half percent (2.50%), of all of the following conditions: (a) as of such date, no Default or Event of Default is in existence, (b) Tangible Net Worth during the calendar month ending on such date is greater than or equal to Twenty-Three Million Five Hundred Thousand Dollars ($23,500,000), and (c) average Excess Loan Availability for the three (3) month period ending on such date is greater than or equal to Four Million Dollars ($4,000,000); PROVIDED, that compliance with clause (b) above shall be determined pursuant to the consolidated monthly (or, for the last month in any fiscal year, the annual audited) financial -2- statements of the Designated Companies for such period, all delivered pursuant to SECTION 7.1 and shall prospectively take effect ten (10) Business Days after the date of delivery of such financial statements to the Administrative Agent." (c) SECTION 2.9. Clause (c) of Section 2.9 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "(c) one percent (1%) of the Maximum Facility if such prepayment and termination occurs after the second anniversary of the date hereof (including without limitation during any renewal Term, if applicable)." (d) SECTION 7.1. Clause (a) of Section 7.1 of the Loan Agreement is hereby amended by deleting therefrom the phrase "as soon as practicable and in any event with thirty (30) days after the end of each month, commencing no later than ninety (90) days after the date hereof" and inserting in its place the following: "as soon as practicable and in any event within forty-five (45) days after the end of each month that is the last month of a fiscal quarter and within thirty (30) days after the end of each other month," (e) SECTION 8.17. The table contained in Section 8.17 of the Loan Agreement is hereby amended and restated in its entirety, as follows:
"PERIOD AMOUNT ------- ------ June 30, 1996 through and including $19,000,000 September 29, 1996 September 30, 1996 through and including $19,000,000 December 30, 1996 December 31, 1996 through and including $19,000,000 March 30, 1997 March 31, 1997 through and including $19,000,000 June 29, 1997 June 30, 1997 through and including $19,250,000 September 29, 1997 September 30, 1997 through and including $19,500,000 December 30, 1997 -3- December 31, 1997 through and including $20,000,000 March 30, 1998 Each three month period thereafter The actual Tangible Net commencing on March 31 and ending Worth of the Designated on the next succeeding June 29 Companies as of the prior September 30, plus $1,500,000 Each three month period thereafter The actual Tangible Net commencing on June 30 and ending Worth of the Designated on the next succeeding September 29 Companies as of the prior December 31, plus $1,500,000 Each three month period thereafter The actual Tangible Net commencing on September 30 and ending Worth of the Designated on the next succeeding December 30 Companies as of the prior March 31, plus $1,500,000 Each three month period thereafter The actual Tangible Net commencing on December 31 and Worth of the Designated ending on the next succeeding March 30 Companies as of the prior June 30, plus $1,500,000"
(f) SECTION 8.18. The table contained in Section 8.18 of the Loan Agreement is hereby amended and restated in its entirety, as follows: "PERIOD RATIO ------- ----- Nine month period ending September 30, 1996 (2.85):1.00 Twelve month period ending (1.75):1.00 December 31, 1996 Twelve month period ending (1.75):1.00 March 31, 1997 Twelve month period ending (1.25):1.00 June 30, 1997 Twelve month period ending 1.00:1.00 September 30, 1997 Twelve month period ending 1.20:1.00 December 31, 1997 -4- Twelve month period ending 1.25:1.00" March 31, 1998 and each twelve month period ending on the last day of a calendar quarter thereafter (g) SCOPE. This Amendment No. 2 to Loan and Security Agreement shall have the effect of amending the Loan Agreement and the other Financing Agreements as appropriate to express the agreements contained herein. In all other respects, the Loan Agreement and the other Financing Agreements shall remain in full force and effect in accordance with their respective terms. 2. CONDITIONS TO EFFECTIVENESS. This Amendment No. 2 to Loan and Security Agreement shall be effective immediately upon the execution hereof by Requisite Lenders, the acceptance hereof by each Borrower and each Guarantor, and the delivery hereof to the Administrative Agent, at 111 West Monroe Street, Chicago, Illinois 60603, Attention: Mr. Kevin Delaplane, Vice President, on or before November 14, 1996. Very truly yours, HARRIS TRUST AND SAVINGS BANK, as Administrative Agent and a Lender Pro Rata Share: 25% By: _______________________________ Its: ______________________________ AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Collateral Agent and a Lender Pro Rata Share: 25% By: _______________________________ Its: ______________________________ SANWA BUSINESS CREDIT CORPORATION, as a Lender Pro Rata Share: 12.5% -5- By: _______________________________ Its: ______________________________ MERCANTILE BUSINESS CREDIT, INC., as a Lender Pro Rata Share: 12.5% By: _______________________________ Its: ______________________________ -6- THE BANK OF NEW YORK COMMERCIAL CORPORATION, as a Lender Pro Rata Share: 12.5% By: _______________________________ Its: ______________________________ NATIONSBANK OF TEXAS, N.A., as a Lender Pro Rata Share: 12.5% By: _______________________________ Its: ______________________________ Acknowledged and agreed to as of this 14th day of November, 1996. ALL AMERICAN SEMICONDUCTOR, INC. By: __________________________ Its: _________________________ -7- ACKNOWLEDGMENT AND ACCEPTANCE OF GUARANTORS Each of the undersigned, in its capacity as a Guarantor of the Liabilities of Borrowers to Agents and Lenders under the Loan Agreement, hereby acknowledges receipt of the foregoing Amendment No. 2 to Loan and Security Agreement, accepts and agrees to be bound by the terms thereof, ratifies and confirms all of its obligations under the Master Corporate Guaranty executed by it and agrees that such Master Corporate Guaranty shall continue in full force and effect as to it, notwithstanding such amendment. Dated: November 14, 1996 Each of the Subsidiaries of All American Semiconductor, Inc. listed on Exhibit A attached hereto By: _______________________________ Its: ______________________________ -8- EX-11.1 3 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES EXHIBIT 11.1 COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) QUARTERS NINE MONTHS PERIODS ENDED SEPTEMBER 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- PRIMARY EARNINGS PER SHARE: NET INCOME (LOSS)........................... $ (7,350,000) $ 841,000 $ (7,712,000) $ 2,187,000 ================ ================= ================== ================ WEIGHTED AVERAGE SHARES: Common shares outstanding............... 19,748,600 17,588,296 19,746,118 14,420,449 Common share equivalents................ 310,394 1,071,092 557,002 629,912 ---------------- ----------------- ------------------ ---------------- Weighted average number of common shares and common share equivalents outstanding............... 20,058,994 18,659,388 20,303,120 15,050,361 ================ ================= ================== ================ PRIMARY EARNINGS (LOSS) PER COMMON SHARE........................... $(.37) $.05 $(.38) $.15 ===== ==== ===== ==== FULLY DILUTED EARNINGS PER SHARE: NET INCOME (LOSS)........................... $ (7,350,000) $ 841,000 $ (7,712,000) $ 2,187,000 ================ ================= ================== ================ WEIGHTED AVERAGE SHARES: Weighted average number of common shares and common share equivalents outstanding............... 20,058,994 18,659,388 20,303,120 15,050,361 Additional options not included above................................. - 330,557 - 771,736 ---------------- ----------------- ------------------ ---------------- Weighted average number of common shares outstanding as adjusted....... 20,058,994 18,989,945 20,303,120 15,822,097 ================ ================= ================== ================ FULLY DILUTED EARNINGS (LOSS) PER COMMON SHARE........................ $(.37) $.04 $(.38) $.14 ===== ==== ===== ====
EX-27.1 4 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information from the Registrant's consolidated condensed financial statements as of and for the nine months ended September 30, 1996, and is qualified in its entirety by reference to such consolidated condensed financial statements. 1,000 9-MOS DEC-31-1996 SEP-30-1996 199 0 35,572 1,442 67,480 108,020 8,947 3,455 119,837 34,867 60,256 0 0 199 24,515 119,837 181,219 181,219 141,435 141,435 43,888 692 3,923 (8,719) 2,706 (6,013) (1,757) 58 0 (7,712) (.38) (.38)
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